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Cash is King

My favorite professor in graduate school was a self-made millionaire (i.e. Ferraris, private jet…) who had built a number of successful businesses and some not-so-successful ventures. The first assignment in our class was to write “Cash is King” 100 times. I’d learned this lesson when I started my own business. I have seen many times over the years the misunderstanding of cash flow in a business venture; in fact, I believe one of the most useful, and informative aspects of investment due diligence is following the cash flow statement to the balance sheet from a company’s 10-K.

Fair Market Value

I've always been fascinated by the standard vs. premise of value, which is typically considered in a company valuation. I'm specifically interested in the perceived value above liquidation related to contractual and non-contractual relationships, employee expertise, market strength,...often the goodwill aspect of the sale/acquisition. There are plenty of formulas related to this aspect of a purchase, but in my experience the end result largely depends on emotional (perceived) value and negotiation skills. The perceived value seems largely marketing driven and negotiation is often an inherent trait of the individuals at the table. I’ve been following the Program on Negation at Harvard Law school the past couple years and there are an amazing amount of resources available to executives willing to learn. There can be a lot of money made in Goodwill, if you have the right people at the table and driving your Marketing.

Return on Investment

Return on Investment (ROI) is a simple enough calculation, when looking at the end of a project after its completion. The trick to ROI is when looking forward; there is typically a risk aspect (VAR, hurdle rate, beta)that must be determined. The impact of an improper risk rate can be catastrophic, as we saw in the mortages and mortgage backed securities business. Perceived value and often greed can easily drive an investment value that does not hold true over time. Due diligence, proper industry expertise and the involvment of a third party can mitigate much of the risk, but the trick is to use someone who is not directly involved.

The Big Picture

I've always felt the role of finance management is to steer the company through the dangers growth or decline bring. Marketing and operations are not complete without finance, and finance has no use without the growth and support the other two pillars provide. An unhealthy relationship between the three divisions of corporate governance must lead to change, or to ruin.

Having worked alongside Charles, I can attest to his ability to take a pragmatic, well educated, approach to problem solving. His dedication to proper due diligence and effective project management has made him a valuable asset to our organization!

Brandt Smith

Great Manager! It has been a real pleasure doing business with such a professional. His ability to exceed expectations and deliver ahead of schedule has been an extremely valuable asset.

Michael Stephenson